Statement of work (SOW)

Definition

The contract attachment defining one project's scope, deliverables, and price.

Why It Matters

The master agreement carries the legal terms; the statements of work under it carry the money, one project at a time, each with its own end date. That split is what diligence has to price: revenue arriving through SOWs is re-won project by project however recurring the relationship feels, so read the active ones against the invoices and note which expire before closing. A seller's 'recurring' book is often a master agreement over SOWs that each end within the quarter.

In numbers: $180,000 of a $600,000 'recurring' services book turned out to be statements of work rebid each quarter; the contracted floor was $420,000, and that is the number to underwrite.